Oil keeps steady as Middle-East tension keeps prices up

London — Oil prices were little changed on Friday, staying on track for weekly gains, with tensions persisting in the Middle East after Israel rejected a ceasefire offer from Hamas.

Brent crude futures slipped 6c, or 0.1%, to $81.69 a barrel by 8.51am GMT, while US West Texas Intermediate crude futures rose 21c, or 0.3%, to $76.43 a barrel.

Prices rose about 3% in the previous session as Israeli forces bombed the southern border city of Rafah on Thursday, after Prime Minister Benjamin Netanyahu rejected a proposal to end the war in the Palestinian enclave.

The tensions have kept oil prices elevated, with Brent and WTI both set to gain nearly 6% for the week.

“With the words that, ‘no part of the Gaza Strip would be immune from Israel’s offensive’, it was not hard for oil participants to conclude that without even a passing regard for peace, there was not enough conflict-premium priced in,” PVM analyst John Evans said.

US officials made their most pointed criticism so far of Israel’s civilian casualties in Gaza as it turned the focus of its offensive to Rafah.

A Hamas delegation arrived in Cairo on Thursday for ceasefire talks with mediators Egypt and Qatar.

While the conflict has propped up prices, there has been no effect on oil production. Non-Opec output from Norway and Guyana is increasing while Russia is exporting more crude in February than it planned under an Opec+ deal, following a combination of drone attacks and technical outages at its refineries.

On Friday, a fire broke out at the Ilsky oil refinery in Russia’s southern Krasnodar region, which was put out within one hour, regional authorities said in a statement.

Meanwhile, the US treasury department on Thursday sanctioned another three entities based in the United Arab Emirates (UAE) and one tanker registered by Liberia for violating a cap placed on the price of Russian oil by a coalition of Western nations.

Deflation risks in China, the world’s top crude oil importer, are also weighing on global oil prices, IG analyst Tony Sycamore said. 

Reuters